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Free AccessMNI 5 THINGS: German Factory Orders Look Set For July Rebound
By Jaspreet Sehmi
LONDON (MNI) - After recent strong survey indicators, prospects for the
German economy in H2 have brightened. However, July factory orders - due for
release Thursday - will provide one of the first glimpses into the actual
performance of the German economy at the start of the second half of the year.
In June, seasonally-adjusted factory orders fell sharply (-4.0% m/m; -0.8% y/y).
Median consensus projections point to improvement in July, with a 1.8% monthly
uptick expected to result in a 1.9% annual gain.
Ahead of the release, we highlight five points for your attention:
- Poor Showing For Consensus Estimates In July: MNI's analysis of actual
vs. consensus historical data shows forecasters tend to be overly optimistic
when it comes to projecting July factory orders. Over the past ten years, the
actual m/m data has undershot the median projection on seven occasions (by an
average of 1.0pp). An upside surprise has occurred just three times over this
period, with actual data overshooting consensus by an average of 2.5pp. However,
this is heavily skewed by a 5.2pp underestimate in July 2014, which if excluded,
leaves the average upside surprise at a much lower 1.2pp. Given the monthly
volatility of the series, and the fact that June's downturn was relatively
sharp, we expect a positive print in July, even if our actual vs. consensus
historical analysis suggests that the outturn could be weaker than the 1.8%
expected by analysts.
- Despite Recent Softness, Orders Remain At Historically Robust Levels:
Despite a declining trend since the start of the year, factory orders are still
at healthy levels, far above both series and recent averages.
- Across The Board Sector & Geographical Weakness In June: The sectoral
split shows that declines occurred in all major categories in June, with
consumer and investment (capital) goods orders more-or-less unwinding their May
spikes of approximately equal magnitude. Adding to the comprehensively weak June
picture, both domestic (-2.8% m/m) and foreign orders (-4.7% m/m) slumped, the
latter driven primarily by weaker non-Eurozone demand.
- VDMA Orders Offer Some Encouragement: Data released Wednesday by
Germany's VDMA industry association showed that July machinery orders rose by 3%
y/y. As this data is only available in non-seasonally adjusted y/y terms, it is
not easily comparable with the factory orders statistics, given that base
effects leave it subject to large swings. Nevertheless, on the less volatile
three-month comparison, machinery orders climbed 5% y/y during the May-July
period, providing some encouragement for a positive outturn in July's factory
orders.
--MNI London Bureau; +44208-865-3829; email: Jason.Webb@marketnews.com
[TOPICS: MAGDS$,M$E$$$,M$G$$$,M$X$$$,M$XDS$]
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.